How banks can ramp up their Process to Pay B2B Product

Lets face it. Banks are starved for revenue as the WSJ pointed out in Profit Engines for Banks Stumble. This is not expected to change. With an economy stuck in the mud for years, and uncertainty so high, loan growth has been slow, and volumes have been declining in other areas – cash management, letters of credit, etc. With expenses skyrocketing for compliance and regulatory responsibilities, what’s a banker to do? Innovate – yikes, that cost money and has to be vetted internally by all kinds of departments (risk, legal, compliance, audit, etc.)

If you look at the procure to pay B2B product market, a big revenue generator for banks is providing services around Accounts Payable, including Pcard products. But banks generally do not provide a “cradle to grave” service, which could include invoice automation, workflow, payment processing, settlement and of course finance. When was the last time you saw a user friendly front end, complete with strong analytics and a great user experience like Taulia. Taulia provides a variety of tools to suppliers, like Cash Planner and CashFlow.

Helping middle market companies collect paper invoices, PDF invoices, faxes, email and consolidate and convert into a standard file format at a line item invoice detail is just not something many of the banks do. Add providing visibility to a Portal that is both user friendly and highly functional would be nice.

But what a minute. Banks dominate the payment, settlement (reconcilement information) and finance space. They can make payments by ACH, Cheque, Commercial Card, Domestic or International Wire, and why couldn’t they add dynamic discounting functionality. They could send reconciliation files back to the Buyer so they can see what has been paid by what means and close out invoice. This is the only ERP integration that is necessary by client.

They can develop multiple options for clients – from full Process and Payment automation to payment only.

So why haven’t the banks invested?

Building and selling this capability involves building a sales team and investing to sell this service. Right now, banks are in expense cutting mode. There is also questions concerning if corporates want to use a bank portal to manage their suppliers to submit invoices and other documentation to effect payment or do they prefer Networks with best of breed technology? From experience, I know banks do not want to be involved in the ERP integration work required to make full blown automation work. And of course that also leaves the question who will do the onboarding?

Vendors such as TradeShift, Taulia, Nipendo, Tungsten, etc. are leading the charge here, and keeping up with innovative and focused vendors is a challenge. But the banks do have the leverage with the thousands of mid market relationships and they ability to provide the payment and settlement capabilities so desperately needed to put the final “P” in P2P.